The Devil Wears Prada

The Devil Wears Prada? Effects of Exposure to Luxury Goods on Cognition and Decision Making
Roy Y.J. Chua Xi Zou

Working Paper
10-034

Copyright © 2009 by Roy Y.J. Chua and Xi Zou Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.

Running Head: Effects of Luxury Goods

The Devil Wears Prada? Effects of Exposure to Luxury Goods on Cognition and Decision Making

Roy Y.J. Chua Harvard Business School 312 Morgan Hall, Boston, MA, 02163. Tel: [phone] Fax: [phone] Email: [e-mail]

Xi Zou London Business School Regent 's Park London NW1 4SA, United Kingdom Tel: [phone] Email: [e-mail]

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ABSTRACT Although the concept of luxury has been widely discussed in social theories and marketing research, relatively little research has directly examined the psychological consequences of exposure to luxury goods. This paper demonstrates that mere exposure to luxury goods increases individuals’ propensity to prioritize self-interests over others’ interests, influencing the decisions they make. Experiment 1 found that participants primed with luxury goods were more likely than those primed with non-luxury goods to endorse business decisions that benefit themselves but could potentially harm others. Using a word recognition task, Experiment 2 further demonstrates that exposure to luxury is likely to activate self-interest but not necessarily the tendency to harm others. Implications of these findings were discussed.

(Abstract word count: 114/150) (Text word count: 2492/2500) (Number of References: 21/30) Key Words: Luxury goods, Cognition, Decision making, Self-interest

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Gandhi once wrote that “a certain degree of physical harmony and comfort is necessary…but above a certain level it becomes a hindrance rather than a help.”

References: 21/30) Key Words: Luxury goods, Cognition, Decision making, Self-interest 2 Gandhi once wrote that “a certain degree of physical harmony and comfort is necessary…but above a certain level it becomes a hindrance rather than a help.” (Tendulkar, 1961, p. 88). This observation raises interesting questions for psychologists regarding the effects of luxury. What psychological consequences do luxury goods have on people? In this report, we argue and present evidence that the mere exposure to luxury goods can increase individuals’ propensity to commit self-interested cognition and decision-making. Our argument involves two key premises: luxury is intrinsically linked to self-interest and mere exposure to luxury can activate related mental representations affecting cognition and decision-making. A wide range of research from social theories to brain studies (Berry, 1994; van der Veen, 2003; Twitchell, 2003; Hilton, 2004; Danziger, 2005; Tsai, 2005; Mandel, Petrova, & Cialdini, 2006) has discussed the concept of luxury. Although these discussions have taken various perspectives, a consistent theme is that luxury goods are related to the concept of personal desire. For example, Berry’s (1994) account in The Idea of Luxury and Twitchell’s (2003) account on American’s Love Affair with Luxury both described a link between the perpetuation of the luxury culture and individuals’ desires. In an experimental setting, Kemp (1998) found that a good was regarded as more luxurious if it was the object of desire as opposed to a relief for a state of discomfort. These accounts characterized luxury goods as progressive refinements of basic human needs. People pursue luxury in part to fulfill certain personal desires. In other words, the very notion of luxury involves increasing pleasure beyond basic functionality (van der Veen, 2003; Kemp, 1998), suggesting a motivation that focuses on hedonist experiences. Likewise, marketing researchers have shown that people buy luxury goods not merely to impress social others or gain symbolic status, but also to fulfill self-directed pleasures or gratification for themselves (Tsai, 2005; Vigneron & Johnson, 1999). Some indirect 3 evidence on the link between luxury and self-interest can be found in recent findings in brain research (Schaefer & Rotte, 2007). When exposed to luxury brands (of cars), people’s medial prefrontal cortex (MPFC) became activated. The MPFC has been related to self-reflection and self-relevant processing in other research (e.g., Johnson, Baxter, Wilder, Pipe, Heiserman, & Prigatano, 2002; Seger, Stone, & Keenan, 2004; Schmitz, Kawahara-Baccus, & Johnson, 2004). Although cumulative evidence suggests a link between luxury and self-interest, this link has not been clearly demonstrated. A critical question is whether mere exposure to luxury goods can indeed activate people’s self-interests and affect their cognition and decision making. In this regard, prior findings from priming research lay the premises for our argument. Priming research shows that the mere presence of a stereotyped group identity or certain environmental artifacts can activate associated mental representations, as well as affect subsequent behaviors in line with these mental representations (Bargh, Chen, & Burrows, 1996; Macrae et al, 1998; Dijksterhuis & Bargh, 2001). For instance, Kay, Wheeler, Bargh, and Ross (2004) found that exposure to objects common to the domain of business (e.g., boardroom tables and briefcases) as opposed to neutral objects (e.g., a kite or toothbrush) increased the cognitive accessibility of the construct of competition, the likelihood that an ambiguous social interaction would be perceived as less cooperative, and the amount of money that participants proposed to retain for themselves in an "Ultimatum Game." Likewise, Vohs, Mead, and Goode (2006) showed that when primed with money, people become more oriented toward self-sufficiency; money-primed subjects were more likely than those not primed with money to maintain social distance from others and were less likely to ask for help. Extending this body of findings, we argue that luxury goods can activate the concept of self-interest and affect subsequent cognition. Central to our thesis is the presence of an implicit 4 link between the notion of luxury and self-interest. In Experiment 1, we show that when primed with luxury, people are more likely to endorse self-interested business decisions (profit maximization), even at the expense of others. Because the business decisions used in Experiment 1 involve inflicting potential social harm, it is important to isolate whether priming luxury also activates the tendency to harm others. Experiment 2 further demonstrates that exposure to luxury is likely to activate self-interest but not the tendency to harm others. EXPERIMENT 1 Eight-seven participants (47% male, average age 24) at a large East-coast university were randomly assigned into two experimental conditions – the “luxury goods” condition and the “non-luxury goods” condition. In each condition, participants first viewed pictures of either luxury or non-luxury consumer products (shoes and watches) and then completed a marketing questionnaire regarding these products (see Appendix 1 for sample pictures). They were first asked to describe key features of the products presented. These primes were pre-tested to ensure that most people would regard the depicted products to be either luxurious or just normal functional goods. Descriptions written by participants were consistent with the prime. For instance, participants in the non-luxury prime condition would typically describe the products as “Everyday products that are necessities” or “they 're fairly simple; they also look very functional” whereas those in the luxury prime condition would write descriptions such as “They are all very glamorous and glitzy,” or “these products are all designer items, and are all fairly expensive.” Next, each participant completed an allegedly unrelated second questionnaire involving three business decision making scenarios. These scenarios were designed to tap the extent to which people place self-interests (operationalized as profit-maximization for one’s firm) above society-interests. In all scenarios, participants had to imagine that they were the chief executive 5 of a firm. The assumption is that profit maximization for the firm would directly benefit these protagonists1. In scenario 1, participants were asked to imagine that they were the CEO of an auto-motor company that had just created a new model of cars that can bring tremendous profit for the company; however, production of this new car could also potentially pollute the environment2. In scenario 2, participants were asked to imagine they were the CEO of a software firm that had created a highly profitable new software but the software still contained some bugs. Finally in the third scenario, participants imagined themselves to be head of an advertising firm asked to help market a new video game; doing so would bring the firm large profits but the video game could potentially induce violence in young boys. At the end of each scenario, participants rated on a 9-point scale (1=definitely will not, 5=somewhat likely to, 9=definitely will) on how likely they would produce the car, launch the software, and take on the marketing project respectively. These scenarios were counterbalanced. As expected, results indicated that, controlling for subject age and sex3, luxury-primed participants were significantly more likely to endorse production of a new car that might pollute the environment (F(1,82)= 9.75, p